The Return of Credit Default Swaps

Are credit-default swaps once again becoming a problem? Wall Street’s system for determining payments on the derivatives that were partially to blame for the financial crisis is “showing cracks,” according to Bloomberg. In April and July, firms adopted practices to try to standardize settlements and defer risk, but disparities are once again emerging. Flaws in the system, Bloomberg suggests, could be ammunition for Barack Obama as he pushes his plan to overhaul financial regulation.